A Consultant's View
Prairie Trail Software, Inc. ............................................................. January 2006
"Let all your things have their places. Let each part of your business have its time." Ben Franklin
When most of us read the maxim for Benjamin Franklin's 3rd virtue, we think about keeping things organized and planned. Yet, that may not be the real order needed today.
Organization and planning are great virtues in business arenas which do not have rapid change. In such an environment, the companies that have great order survive and prosper. This is what people were striving for, and valued, in the 1950's and many people still enjoy having such order in their lives today.
The flip side to such order is that such businesses are not likely to see disruptive changes happening to the arena. It took a long time for people to recognize the disruptive change that automobile imports brought to the marketplace, or the force of change that WalMart was bringing. The peace and order that so many folk crave are actually times of stagnation.
"Periods of tranquility are seldom prolific of creative achievement. Mankind has to be stirred up." -Alfred North Whitehead Today, nobody can sit still-the marketplace is changing too rapidly. Even companies that caused change (like Microsoft or WalMart) are running scared that another company can, or will, come into their domain, change the marketplace, and cause them to lose.
Microsoft is constantly trying to reinvent their products to counter new technologies that appear. WalMart is constantly trying new store formats, new store locations, and new technology to manage the delivery of items to the stores.
Which gets to the question: "what constitutes 'order' in a highly competitive market?" Is it having intensity or something else? For example, in the computer programming field, some are pushing for strong standards while others are pushing back just as strongly for no controls.
"One of the advantages of being disorderly is that one is constantly making exciting discoveries." - AA Milne
People who thrive on intensity can become bogged down by disorder, or wind up being very creative. Either way, they don't fit with the order that many corporate structures enjoy.
Companies that have a history of innovation are not disorderly, but structured in how they approach new ideas. They celebrate change, new ideas, and mistakes. Some notably creative companies have a policy of replacing all their current products within five years. Existing products are not expected to remain. They also have the strength to stay with a product that the market keeps buying until the market tells them that they have something better.
Corporate Order? Yes. But what that order is is wide open for interpretation. In some companies, order is following the well laid out plans that cover every option. In other companies, good order means the discipline to try out new ideas and show where that idea can make a profit.
Let each part of your business have its time.
A recent Inc. Magazine article pointed to a number of companies that have implemented ISO 9000 and are now wondering why. The promised return on investment is just not showing up.
ISO 9000 is often over sold to top management. One consulting firm advertises that ISO 9000 implementation in a software development group will have an ROI of over 700%. How can management turn down an investment that has that kind of payback?
But, most companies see only a small improvement in the bottom line, and then for only a short time. Some companies, where it makes a significant difference, would not have received contracts without ISO 9000 certification. Extreme results appear to come from companies that have not re-examined their processes in years and use the ISO 9000 certification process to re-engineer how they run their business.
One of the most critical questions management must face before jumping into ISO 9000 implementation is: will the time and effort needed for doing this certification prevent us from doing something more important? ISO 9000 can add a layer of bureaucracy and slow a company down.
So, what can a company gain by implementing ISO 9000? The process is one of documenting how a company works. That means that new hires can be more easily trained in the processes of the company. Deviations from those processes can be more easily identified and tracked. Does it mean that the company produces higher quality product? Not necessarily. Unless the company already knows how to produce quality, then the implementation of ISO 9000 will only codify the current quality level.
Documenting and rethinking a company's processes can help a company that has grown quickly and is now at a point where there are layers of management.
What does a company lose by implementing ISO 9000? First, there are a bunch of direct costs: consultants, audits, etc. Secondly, there is the cost of managment's time and effort. Thirdly, and possibly the most important, implementing ISO 9000 puts a certain mental constraint on the people in the company. If operating "fast and loose" has been part of the competitive advantage of your company, it will be gone.
ISO 9000 is not the fantastic investment that some consultants say. Implementing ISO 9000 is not cheap, and it doesn't have that great a return on investment. There are ways to grow a company while improving quality and another way might be more useful to a fast moving, entrepreneural company.
For those who have not encountered it before, ISO 9000 means, a very specific thing. The International Standards Organization has produced the standards for many things. I.e. what constitutes 1 meter. In the USA, the American National Standards Association governs the fue1 standards that we have that are not international. A while back, the ISO decided to identify what constituted good management. Based on that effort, it issued a document defining a certain style of management and called it ISO 9000. Under that document were industry specific versions such as ISO 9001 for service organizations (now just part of the ISO 9000 document) and ISO 9002 for organizations that do not have design and development requirements. Why is this important? Well, for one thing, other companies are advertising that they are compliant and large companies often require it of their suppliers.
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Dave Randolph,
President, Prairie Trail Software